DigitalOcean Holdings (NYSE:DOCN) Financial Strength

: 3 (As of Jun. 2023)

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DigitalOcean Holdings has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.

Warning Sign:

DigitalOcean Holdings Inc displays poor financial strength. Usually, this is caused by too much debt for the company.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

DigitalOcean Holdings did not have earnings to cover the interest expense. DigitalOcean Holdings's debt to revenue ratio for the quarter that ended in Jun. 2023 was 2.44. As of today, DigitalOcean Holdings's Altman Z-Score is 1.26.

Competitive Comparison

For the Software - Infrastructure subindustry, DigitalOcean Holdings's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Annual Data Quarterly Data

DigitalOcean Holdings Financial Strength Distribution

For the Software industry and Technology sector, DigitalOcean Holdings's Financial Strength distribution charts can be found below:

* The bar in red indicates where DigitalOcean Holdings's Financial Strength falls in comparison to its industry or sector. The grey bar indicates the Financial Strength's extreme value range as defined by GuruFocus.

DigitalOcean Holdings Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

DigitalOcean Holdings's Interest Expense for the months ended in Jun. 2023 was $-2.1 Mil. Its Operating Income for the months ended in Jun. 2023 was $-1.1 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2023 was $1,587.4 Mil.

DigitalOcean Holdings's Interest Coverage for the quarter that ended in Jun. 2023 is

DigitalOcean Holdings did not have earnings to cover the interest expense.

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

DigitalOcean Holdings's Debt to Revenue Ratio for the quarter that ended in Jun. 2023 is

Debt to Revenue Ratio	=	Total Debt (Q: Jun. 2023 )			/	Revenue
	=	(Short-Term Debt & Capital Lease Obligation	+	Long-Term Debt & Capital Lease Obligation)	/	Revenue
	=	(71.704	+	1587.397)	/	679.256
	=	2.44

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

DigitalOcean Holdings has a Z-score of 1.26, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

Warning Sign:

Altman Z-score of 1.26 is in distress zone. This implies bankruptcy possibility in the next two years.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

DigitalOcean Holdings (NYSE:DOCN) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

DigitalOcean Holdings has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.

DigitalOcean Holdings Financial Strength Related Terms

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DigitalOcean Holdings (NYSE:DOCN) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » DigitalOcean Holdings Inc (NYSE:DOCN) » Definitions » Financial Strength

Comparable Companies

Traded in Other Exchanges

0SU:Germany

Address

101 6th Avenue, New York, NY, USA, 10013

Website

https://www.digitalocean.com

DigitalOcean Holdings Inc is a cloud computing platform offering on-demand infrastructure and platform tools for developers, start-ups and small and medium-sized businesses. The customers use the platform for a wide range of cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, and managed services, among many others. The group has a business presence in North America, Europe, Asia and Other countries.

Executives

Christopher Merritt	director	C/O DIGITALOCEAN HOLDINGS, INC., 101 6TH AVENUE, NEW YORK NY 10013
Matt Steinfort	officer: Chief Financial Officer	1805 29TH STREET SUITE 2050, BOULDER CO 80301
Muhammad Aaqib Gadit	officer: Chief Revenue Officer	C/O DIGITALOCEAN HOLDINGS, INC., 101 6TH AVENUE, NEW YORK NY 10013
Megan Wood	officer: Chief Strategy Officer	C/O DIGITALOCEAN HOLDINGS, INC., 101 6TH AVENUE, NEW YORK NY 10013
Adrienne Elizabeth Calderone	officer: SVP, Chief Accounting Officer	101 6TH AVENUE, NEW YORK NY 10013
Gabriel Monroy	officer: Chief Product Officer	C/O DIGITALOCEAN HOLDINGS, INC., 101 6TH AVENUE, NEW YORK NY 10013
Ah Parallel Fund Iii-q, L.p.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Ah Capital Management, L.l.c.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Ah Parallel Fund Iii-b, L.p.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Ah Parallel Fund Iii-a, L.p.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Ah Parallel Fund Iii, L.p.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Ah Equity Partners Iii (parallel), L.l.c.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Ah Equity Partners Iii, L.l.c.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Andreessen Horowitz Fund Iii-a, L.p.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025
Andreessen Horowitz Fund Iii, L.p.	10 percent owner	2865 SAND HILL ROAD, SUITE 101, MENLO PARK CA 94025